It Seems that Midterms are Good for the Market: Stocks are Positive 86% of the Time Since 1928

That would be nice and cheerful if we go up 16% from here.

Since 1950, the S&P 500 jumped 16%, on average, in the six months following midterms. The market was green following all 16 of them, points out Bob Doll, chief equity strategist at Nuveen Asset Management. 

Since 1928, the market advanced 7%, on average, and it’s been positive 86% of the time in the three months following midterms, notes Barclays Capital strategist Jonathan Glionna.

Why is this? Markets hate uncertainty, and elections remove uncertainty, says Doll. It doesn’t matter which party wins. 

I already think a nice Santa Clause rally is baked into this market unless Ebola gets very bad or we have an escalation (or a big-time terrorist attack) in the war with ISIS. You add low gas prices to this equation and it is like nearly every American gets a raise of a few percent going into the holidays. Hopefully, they will spend this money and feel a little richer and more confidant because of it.

What would be interesting is if the GOP lets Obama win a few like a free-trade agreement with Asia and maybe some tax reform before they go to war over immigration reform. The GOP wants a few wins to run on in 2016 and Obama probably would like a nice roaring economy to make us forget the last 6 years of malaise. Freer trade and tax reform would go a long way to accomplishing those goals.